Phil,
No this is not the double bottom yet. In fact the stock is still trying to recover from the recent high volume run-up and recovery.
If you have access to a bar chart for LCAV notice the uncharacteristic price and volume activity. What we have here is a "high pole" with a pullback to the break out point and lower. In the Point and Figures chart this a bear channel reversal signal (high pole formation with a pullback of greater than 50%.
With today's activity, a minor turn around was attempted with no success. Current price support (on a closing basis) held at $5.625. If this support fails the next support is $5.00/sh.
Of the momentum indicators, long term is positive, and the intermediate and short term indicators are negative.
Elliott wave analysis does not show sufficient random price activity to give a clear interpretation. What we are able to see is that the Fibonacci retracement (pullback) is only 22% which is very weak. Retracements of 50% or greater are necessary to show a continuation of the bull trending channel. A "C wave" downward price objective of $5.00/sh. is possible.
In summary, what we have here is stock (LCAV) that was in a long term accumulation phase, which was interrupted with the Zack's Hot Stock news letter of April 25, 1997 <http://www.redhotstocks.com>. This brought in outside short term traders which undoubtably caused the uncharacteristic high volume, high percentage run-up and subsequent pullback.
Any follow-up of the affects of this news release has so far failed to occur. I think the news letter accurately reflects the fundamental outlook of the company. The long term prospects are positive, but the short term price activity is unclear due to the recent volatile price fluctuations. The price objectives stated on page 7 of the 10 page referenced report are on target with the possible exception of the statement "...we expect to see the year high of $12 again shortly."
This all depends on what length of time represents "shortly".
Phil, you made the statement, "After stabilization good time to average down"? If you don't mind my observation, you never want to buy a stock when it is in a confirmed down trend. Rather, you only buy stocks in the accumulation phase preliminary to an upside move, or in a confirmed bull trend. We aren't there yet and you might be in this stock at a higher price than you could have had if you had waited for the right time. But, that's what technical analysis is all about.
Be patient time and price/volume activity will tell us when to move. I'll inform this thread of my opinions (not guaranteed to be right) when the time is right.
It should be noted that I will be out of town from May 22 to June 3, and back on line June 4. Consequently any activity of this issue will not be followed. Happy investing.
Regards,
Harry
|
